SoftBank confirms it’s selling 22% in Flipkart

SoftBank’ $2.5-billion investment in Flipkart made through the Vision Fund, less than a year ago, would fetch it $4 billion when fully sold.

TNN

May 23, 2018, 12:45 IST

MUMBAI: Japan’s SoftBank will sell its entire 22% stake in Flipkart to Walmart, bringing to an end the uncertainty surrounding its stance on the sale of its shares in the homegrown etailer. SoftBank’ $2.5-billion investment in Flipkart made through the Vision Fund, less than a year ago, would fetch it $4 billion when fully sold.

A company spokesperson said on Tuesday, “SoftBank confirms the sale of its entire stake in Flipkart to Walmart.” The person did not elaborate on the date by which the transaction is expected to be formalised.

TOI reported in its May 22 edition that SoftBank had taken a call to sell its shares two weeks after the Walmart-Flipkart deal was announced. While SoftBank hasn’t specified any reasons for delaying its decision, the tax implication attached to the share sale has emerged as a big hindrance for the group. SoftBank’s stake sale to Walmart would entail short-term capital gains tax if the transaction takes place within 24 months of purchase of shares.

Masayoshi Son, the founder and CEO of SoftBank, had been undecided till now about exiting Flipkart, as TOI reported first in its May 11 edition. The US retail giant Walmart picked up a 77% stake in Flipkart, including what SoftBank held in the Bengaluru company, valuing it at around $21 billion. But a day later, TOI learnt that the Japanese group was still in discussions with Walmart to “determine its role in Flipkart going forward”.

Though SoftBank’s Son had inadvertently announced — even before the deal was officially unveiled by Walmart and Flipkart — that the fund had exited the Indian company, he changed his mind a day later.

SoftBank’s move to exit Flipkart in just less than a year of it investing in the web retailer leaves it with only a solo bet on Paytm Mall.

Before taking a wager on the market leader Flipkart, SoftBank had backed Snapdeal back in 2014, which ended with the group writing off almost $1 billion invested in the Delhi-based online marketplace. Last year, SoftBank tried orchestrating a Snapdeal sale to Flipkart, which fell through.